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EXHIBIT 10.22.7
ESCROW AGREEMENT
This Escrow Agreement (the "Escrow Agreement") dated as of November 29,
2000 (the "Effective Date") by and between Probex Fluids Recovery, Inc. (the
"Company") and Wilmington Trust Company, as escrow agent hereunder (the "Escrow
Agent"), and for the benefit of the investors set forth in Schedule 1 hereto
(together with their successors and assigns and including any holders of the
Notes (as defined below), collectively, referred to herein as the
"Noteholders").
WHEREAS, the Company and the Noteholders have entered into that certain Note
Purchase Agreement (the "Purchase Agreement") for the purchase by the
Noteholders of certain 7% Senior Secured Convertible Notes Due November 28, 2004
(the "Notes") from the Company; and
WHEREAS, pursuant to the Purchase Agreement there is required to be deposited in
escrow by the Company certain funds as set forth on Schedule 2, and such funds
are to be held by the Escrow Agent subject to the terms and conditions set forth
herein.
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. APPOINTMENT. The Company and the Noteholders hereby appoint the Escrow Agent
as their escrow agent for the purposes set forth herein, and the Escrow Agent
hereby accepts such appointment under the terms and conditions set forth herein.
2. ESCROW FUND. Simultaneous with the execution and delivery of this Escrow
Agreement, the Company is depositing with the Escrow Agent the sum indicated as
the escrow deposit on Schedule 2 (the "Escrow Deposit"). The Escrow Agent shall
hold the Escrow Deposit and, subject to the terms and conditions hereof, shall
invest and reinvest the Escrow Deposit and the proceeds thereof (the "Escrow
Fund") as directed in Section 3.
3. INVESTMENT OF ESCROW FUND. During the term of this Escrow Agreement, the
Escrow Fund shall be invested and reinvested by the Escrow Agent upon the terms
and conditions set forth in this Escrow Agreement or in such other investments
as shall be directed in writing by the Company and the Noteholders holding at
least 66 2/3% of the principal amount of the Notes at the time outstanding
(exclusive of the Notes then owned by the Company or any of its affiliates
including officers and directors of the Company) (the "Requisite Noteholders")
and as shall be acceptable to the Escrow Agent. In the absence of investment
instructions from the Company and the Requisite Noteholders, the Escrow Agent
shall invest the Escrow Fund in the U.S. Government Portfolio of the Wilmington
Funds (the "Fund"), a mutual fund managed by Xxxxxx Square Management
Corporation, a subsidiary of the Escrow Agent. The parties acknowledge that
shares in this Fund are not obligations of the Escrow Agent, are not deposits
and are not insured by the FDIC. The Escrow Agent or its affiliate is
compensated by the Fund for services rendered in its capacity as investment
advisor, custodian and/or transfer agent, and such compensation is both
described in detail in the prospectus for the Fund, and is in addition to the
compensation, if any, paid to the Escrow Agent in its capacity as escrow agent
hereunder. All investment orders involving U.S. Treasury obligations, commercial
paper and other direct investments may be executed through broker-dealers
selected by the Escrow Agent (which shall include affiliates of the Escrow
Agent). Periodic statements will be provided to the Company and the Noteholders
reflecting transactions executed on behalf of the Escrow Fund. The Company and
any Noteholder, upon written request, will receive a statement of transaction
details upon completion of any securities transaction in the Escrow Fund without
any additional cost. The Escrow Agent shall have the right to liquidate any
investments held in order to provide funds necessary to make required payments
under this Escrow Agreement. The Escrow Agent shall have no liability for any
loss sustained as a result of any investment in the Fund or any investment made
pursuant to the instructions of the parties hereto or as a result of any
liquidation of any investment prior to its maturity or for the failure of the
parties to give the Escrow Agent instructions to invest or reinvest the Escrow
Fund.
4. DISPOSITION AND TERMINATION. The Escrow Agent shall deliver the Escrow Fund
as follows:
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(i) Before July 1, 2001, the Escrow Agent shall not release any
funds from the Escrow Fund, except pursuant to written
instructions executed by both the Company and the Requisite
Noteholders;
(ii) On or after July 1, 2001, until December 31, 2001, the Escrow
Agent shall release funds from the Escrow Fund upon written
notification from the Company from time to time, provided,
however, the Company may withdraw no more than $250,000 from
the Escrow Fund during each of the third and fourth calendar
quarters of 2001, as needed, and all such withdrawals shall be
for budgeted capital expenditures made in the ordinary course
of business. The Escrow Agent will notify the Noteholders in
writing of each such withdrawal, and if no written objection
from the Requisite Noteholders is received by the Escrow Agent
within ten days of the delivery of such notice to the
Noteholders, the Escrow Agent shall deliver the requested
funds to the Company; and
(ii) After December 31, 2001, the Escrow Agent shall release all or
a portion of the remaining funds from the Escrow Fund upon
written notification from the Company from time to time, as
needed, and all such withdrawals shall be for capital
expenditures made in the ordinary course of business.
Upon delivery of the entire Escrow Fund by the Escrow Agent, this Escrow
Agreement shall terminate, subject to the provisions of Section 9.
5. ESCROW AGENT. The Escrow Agent undertakes to perform only such duties as are
expressly set forth herein and no duties shall be implied. The Escrow Agent
shall have no liability under and no duty to inquire as to the provisions of any
agreement other than this Escrow Agreement and the use of the proceeds withdrawn
from the Escrow Fund by the Company pursuant to this Escrow Agreement. The
Escrow Agent may rely upon and shall not be liable for acting or refraining from
acting upon any written notice, instruction or request furnished to it hereunder
and believed by it to be genuine and to have been signed or presented by the
proper party or parties. The Escrow Agent shall be under no duty to inquire into
or investigate the validity, accuracy or content of any such document. The
Escrow Agent shall have no duty to solicit any payments which may be due it or
the Escrow Fund. The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith except to the extent that a court of competent
jurisdiction determines that the Escrow Agent's gross negligence or willful
misconduct was the primary cause of any loss to the Company or the Noteholders.
The Escrow Agent may execute any of its powers and perform any of its duties
hereunder directly or through agents or attorneys (and shall be liable only for
the careful selection of any such agent or attorney) and may consult with
counsel, accountants and other skilled persons to be selected and retained by
it. The Escrow Agent shall not be liable for anything done, suffered or omitted
in good faith by it in accordance with the advice or opinion of any such
counsel, accountants or other skilled persons. In the event that the Escrow
Agent shall be uncertain as to its duties or rights hereunder or shall receive
instructions, claims or demands from any party hereto which, in its opinion,
conflict with any of the provisions of this Escrow Agreement, it shall be
entitled to refrain from taking any action and its sole obligation shall be to
keep safely all property held in escrow until it shall be directed otherwise in
writing by all of the other parties hereto or by a final order or judgment of a
court of competent jurisdiction. Anything in this Escrow Agreement to the
contrary notwithstanding, in no event shall the Escrow Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Escrow Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action.
6. DISPUTES. If the Requisite Noteholders give written notice to the Escrow
Agent objecting to any withdrawal as provided in Section 4(ii) or in the event
the Escrow Agent receives conflicting instructions under this Escrow Agreement,
the Company and the Requisite Noteholders shall have 45 days to submit a joint
written instruction to the Escrow Agent. If a joint written instruction from the
Company and the Requisite Noteholders is not received by the Escrow Agent after
such 45 day period, any such conflicts shall be resolved in a court of competent
jurisdiction. The Escrow Agent shall be fully protected in refraining from
acting until such conflict is resolved to the satisfaction of the Escrow Agent.
In addition, the Escrow Agent shall have the right to institute a xxxx of
interpleader in any court of competent jurisdiction to determine the rights of
the parties, and the parties shall pay all costs, expenses and disbursements in
connection therewith, including reasonable attorneys' fees.
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7. SUCCESSION. The Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving 10 days advance notice in writing of such
resignation to the other parties hereto specifying a date when such resignation
shall take effect. The Escrow Agent shall have the right to withhold an amount
equal to any amount due and owing to the Escrow Agent, plus any costs and
expenses the Escrow Agent shall reasonably believe may be incurred by the Escrow
Agent in connection with the termination of the Escrow Agreement. Any
corporation or association into which the Escrow Agent may be merged or
converted or with which it may be consolidated, or any corporation or
association to which all or substantially all the escrow business of the Escrow
Agent's corporate trust line of business may be transferred, shall be the Escrow
Agent under this Escrow Agreement without further act.
8. FEES. The Company agrees to (i) pay the Escrow Agent upon execution of this
Escrow Agreement and from time to time thereafter reasonable compensation for
the services to be rendered hereunder, which unless otherwise agreed in writing
shall be as described in Schedule 2 attached hereto, and (ii) pay or reimburse
the Escrow Agent upon request for all expenses, disbursements and advances,
including reasonable attorney's fees and expenses, incurred or made by it in
connection with the preparation, execution, performance, delivery, modification
and termination of this Escrow Agreement.
9. INDEMNITY. The Company shall indemnify, defend and save harmless the Escrow
Agent and its directors, officers, agents and employees (the "indemnitees") from
all loss, liability or expense (including the fees and expenses of in house or
outside counsel) arising out of or in connection with (i) the Escrow Agent's
execution and performance of this Escrow Agreement, except in the case of any
indemnitee to the extent that such loss, liability or expense is due to the
gross negligence or willful misconduct of such indemnitee, or (ii) its following
any instructions or other directions from the Company or the Noteholders, except
to the extent that its following any such instruction or direction is expressly
forbidden by the terms hereof. The parties hereto acknowledge that the foregoing
indemnities shall survive the resignation or removal of the Escrow Agent or the
termination of this Escrow Agreement. The parties hereby grant the Escrow Agent
a lien on, right of set-off against and security interest in the Escrow Fund for
the payment of any claim for indemnification, compensation, expenses and amounts
due hereunder.
10. TINS. The Company and each Noteholder represents that its correct Taxpayer
Identification Number ("TIN") assigned by the Internal Revenue Service or any
other taxing authority is set forth in Schedule 1. All interest or other income
earned under the Escrow Agreement shall be allocated and/or paid as directed in
a joint written direction of the Company and the Noteholders and reported by the
recipient to the Internal Revenue Service or any other taxing authority.
Notwithstanding such written directions, Escrow Agent shall report and, as
required withhold any taxes as it determines may be required by any law or
regulation in effect at the time of the distribution. In the absence of timely
direction, all proceeds of the Escrow Fund shall be retained in the Escrow Fund
and reinvested from time to time by the Escrow Agent as provided in Section 3.
In the event that any earnings remain undistributed at the end of any calendar
year, Escrow Agent shall report to the Internal Revenue Service or such other
authority such earnings as it deems appropriate or as required by any applicable
law or regulation or, to the extent consistent therewith, as income to the
Company. In addition, Escrow Agent shall withhold any taxes it deems appropriate
and shall remit such taxes to the appropriate authorities.
11. NOTICES. All communications hereunder shall be in writing and shall be
deemed to be duly given and received:
(i) upon delivery if delivered personally or upon confirmed
transmittal if by facsimile;
(ii) on the next Business Day (as hereinafter defined) if sent by
overnight courier; or
(iii) four (4) Business Days after mailing if mailed by prepaid
registered mail, return receipt requested, to the appropriate
notice address set forth on Schedule 1 or at such other address
as any party hereto may have furnished to the other parties in
writing by registered mail, return receipt requested.
Notwithstanding the above, in the case of communications delivered to the Escrow
Agent pursuant to (ii) and (iii) of this Section 11, such communications shall
be deemed to have been given on the date received by the Escrow Agent.
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In the event that the Escrow Agent, in its sole discretion, shall determine that
an emergency exists, the Escrow Agent may use such other means of communication
as the Escrow Agent deems appropriate. "Business Day" shall mean any day other
than a Saturday, Sunday or any other day on which the Escrow Agent located at
the notice address set forth on Schedule 1 is authorized or required by law or
executive order to remain closed.
12. SECURITY PROCEDURES. In the event funds transfer instructions are given
(other than in writing at the time of execution of this Escrow Agreement),
whether in writing, by telecopier or otherwise, the Escrow Agent is authorized
to seek confirmation of such instructions by telephone call-back to the person
or persons designated on schedule 3 hereto ("Schedule 3"), and the Escrow Agent
may rely upon the confirmations of anyone purporting to be the person or persons
so designated. The persons and telephone numbers for call-backs may be changed
only in a writing actually received and acknowledged by the Escrow Agent. The
Escrow Agent and the beneficiary's bank in any funds transfer may rely solely
upon any account numbers or similar identifying numbers provided by the Company
or the Noteholders to identify (i) the beneficiary, (ii) the beneficiary's bank,
or (iii) an intermediary bank. The Escrow Agent may apply any of the escrowed
funds for any payment order it executes using any such identifying number, even
where its use may result in a person other than the beneficiary being paid, or
the transfer of funds to a bank other than the beneficiary's bank or an
intermediary bank designated. The parties to this Escrow Agreement acknowledge
that these security procedures are commercially reasonable.
13. MISCELLANEOUS. The provisions of this Escrow Agreement may be waived,
altered, amended or supplemented, in whole or in part, only by a writing signed
by all of the parties hereto. Neither this Escrow Agreement nor any right or
interest hereunder may be assigned in whole or in part by any party, except as
provided in Section 7, without the prior consent of the other parties. This
Escrow Agreement shall be governed by and construed under the laws of the State
of New York. Each party hereto irrevocably waives any objection on the grounds
of venue, forum non-conveniens or any similar grounds and irrevocably consents
to service of process by mail or in any other manner permitted by applicable law
and consents to the jurisdiction of the courts located in the State of New York.
The parties further hereby waive any right to a trial by jury with respect to
any lawsuit or judicial proceeding arising or relating to this Escrow Agreement.
No party to this Escrow Agreement is liable to any other party for losses due
to, or if it is unable to perform its obligations under the terms of this Escrow
Agreement because of, acts of God, fire, floods, strikes, equipment or
transmission failure, or other causes reasonably beyond its control. This Escrow
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of
the 29th day of November 2000.
WILMINGTON TRUST COMPANY
AS ESCROW AGENT
By: /s/ XXXXXX X. XXXX
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PROBEX FLUIDS RECOVERY, INC.
By: /s/ XXXXX X. XXXX
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Name: Xxxxx X. Xxxx
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Title: Vice President
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